Section C. Streamline Refinances Overview

HUD 4155.1

Overview

Chapter 6, Section C

Section C. Streamline Refinances

In This Section This section contains the topics listed in the table below.

Topic 1 2 3

4 5

Topic Name Requirements for Streamline Refinances Credit Qualifying Streamline Refinances Streamline Refinance Borrower and Property Related Requirements Types of Permissible Streamline Refinances Establishing Net Tangible Benefit of Streamline Refinance

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1. Requirements for Streamline Refinances

Chapter 6, Section C

Introduction

This topic contains information on requirements for streamline refinances, including

a description of a streamline refinance permissible geographic areas use of appraisals ignoring or setting aside an appraisal reviewing CAIVRS, LDP and GSA exclusion lists credit report and credit score requirements for streamline refinances use of TOTAL Scorecard on streamline refinances payoff statement requirement on streamline refinances, and loan application on streamline refinance.

Change Date March 24, 2011

4155.1 6.C.1.a Description of a Streamline Refinance

Streamline refinances

are designed to lower the monthly principal and interest payments on a current FHA-insured mortgage, and

must involve no cash back to the borrower, except for minor adjustments at closing that are not to exceed $500.

4155.1 6.C.1.b Permissible Geographic Areas for Streamline Refinances

Lenders may solicit and process streamline refinance applications from any area of the country, provided the lender is approved for Direct Endorsement (DE) by at least one Homeownership Center (HOC), and, where necessary, licensed to do business in the state in which the property is located.

References: For information on DE Lender Program application and approval, see

HUD 4155.2 2.A, and HUD 4155.2 2.B, and HOC jurisdictions, see HUD 4155.2 12.E.1.

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Chapter 6, Section C

1. Requirements for Streamline Refinances, Continued

4155.1 6.C.1.c Appraisals on Streamline Refinances

FHA does not require an appraisal on a streamline refinance. These transactions can be made with or without an appraisal.

FHA does not require repairs to be completed on streamline refinances with appraisals, with the exception of lead-based paint repairs. However, the lender may require completion of repairs as a condition of the loan.

References: For information on streamline refinances with an appraisal (non-credit qualifying), see HUD 4155.1 3.C.3 , and without an appraisal, see HUD 4155.1 3.C.2 .

4155.1 6.C.1.d Ignoring or Setting Aside an Appraisal on a Streamline Refinance

If an appraisal has been performed on a property, and the appraised value is such that the borrower would be better advised to proceed as if no appraisal had been made, then the

appraisal may be ignored and not used, and lender must notate this decision on the HUD-92900-LT, FHA Loan

Underwriting and Transmittal Summary.

4155.1 6.C.1.e Reviewing CAIVRS, LDP and GSA Exclusion Lists on Streamline Refinances

The Credit Alert Interactive Voice Response System (CAIVRS) does not need to be checked for streamline refinances, but the lender must review, for all borrowers, the

HUD Limited Denial of Participation (LDP) List, and General Services Administration (GSA) List of Parties Excluded from

Federal Procurement or Non-procurement Programs.

References: For more information on HUD's LDP List, GSA exclusion lists, and using CAIVRS to check borrower eligibility for Federally-related credit, see HUD 4155.1 4.A.6, and HUD 4155.1 4.A.7

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Chapter 6, Section C

1. Requirements for Streamline Refinances, Continued

4155.1 6.C.1.f Credit Report and Credit Score Requirements for Streamline Refinances

Except for credit qualifying streamline refinances, FHA does not require a credit report. The lender, however, may require this as part of its credit policy.

If a credit score is available, the lender must enter it into FHA Connection (FHAC). If more than one credit score is available, the lender must enter all available credit scores into FHAC.

4155.1 6.C.1.g Use of TOTAL Scorecard on Streamline Refinances

Effective with case numbers assigned on or after April 18, 2011, FHA no longer requires lenders to certify employment and income on streamline refinance transactions. As a result, lenders will not have sufficient data to score streamline refinances through the Technology Open to Approved Lenders (TOTAL) Scorecard. The TOTAL Scorecard was never intended to be used for streamlines and the results are not considered valid.

A lender who inadvertently uses TOTAL must not enter "ZFHA" as the underwriter in FHA Connection (FHAC) but must instead use its Direct Endorsement (DE) underwriter designation, and the DE underwriter must sign and use his/her Computerized Home Underwriting Management System (CHUMS) identification number on page 3 of the HUD 92900-A, HUD/VA Addendum to Uniform Residential

Loan Application, and page 1 of the HUD-92900-LT, FHA Loan Underwriting and Transmittal

Summary.

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Chapter 6, Section C

1. Requirements for Streamline Refinances, Continued

4155.1 6.C.1.h Payoff Statement Requirement on Streamline Refinances

The lender must obtain payoff statements for all liens to be satisfied from the proceeds of the streamline refinance transaction, and include copies in the case binder submitted for endorsement.

Reference: For more information on obtaining payoff statements for refinances, see HUD 4155.1 3.A.1.j.

4155.1 6.C.1.i Loan Application on Streamline Refinances

Effective with case numbers assigned on or after April 18, 2011, lenders may use an abbreviated Uniform Residential Loan Application (URLA) on noncredit qualifying streamline refinances only.

Lenders are not required to complete sections IV, V, VI, and VIII (k) on an abbreviated URLA, provided all other required information is captured.

Due to various disclosure requirements, the application for mortgage insurance must be signed and dated by the borrower(s) before the loan is underwritten. Lenders are permitted to process and underwrite the loan after the borrower(s) and interviewer complete the initial URLA and initial form HUD 92900-A, HUD/VA Addendum to Uniform Residential Loan Application.

The lender must continue to ensure compliance with the Equal Credit Opportunity Act (ECOA) and all other regulatory requirements.

Reference: For information on ECOA and other regulations, see HUD 4155.2 1.B.5.

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